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Principles of Macroeconomics 3rd Edition
By Betsey Stevenson, Justin Wolfers
Table of Contents
PART I Foundations of Economics
Chapter 1 The Four Core Principles of Economics
Chapter 2 Demand and Consumer Choice
Chapter 3 Supply and Producer Choice
Chapter 4 Equilibrium: Where Supply Meets Demand
PART II Analyzing Markets
Chapter 5 Welfare Economics: Evaluating Market Efficiency
and Market Failure
Chapter 6 Comparative Advantage and Gains From Trade
Chapter 7 International Trade
Chapter 8 Inequality, Poverty, and Social Insurance
Part III Macroeconomic Foundations and the Long Run
Chapter 9 Sizing Up the Economy Using GDP
Chapter 10 Economic Growth
Chapter 11 Unemployment
Chapter 12 Inflation and Money
PART IV Micro Foundations of Macroeconomics
Chapter 13 Consumption and Saving
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Principles of Macroeconomics 3rd Edition
By Betsey Stevenson, Justin Wolfers
Chapter 14 Investment
Chapter 15 The Financial Sector: Banks, Bonds, and Stocks
Chapter 16 International Finance and the Exchange Rate
PART V The Business Cycle
Chapter 17 Tracking the Business Cycle
Chapter 18 Linking Interest Rates and Output Using IS-MP
Analysis
Chapter 19 The Phillips Curve and Inflation
Chapter 20 The Fed Model: Putting it All Together
Chapter 21 Aggregate Demand and Aggregate Supply
PART VI Macroeconomic Policy
Chapter 22 Monetary Policy
Chapter 23 Government Spending, Taxes, and Fiscal Policy
Appendix: A Closer Look at Aggregate Expenditure and the
Multiplier
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Test Bank for Principles of Macroeconomics 3rd Edition By Betsey Stevenson, Justin Wolfers
Name: Class: Date:
Chapter 1
1. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A keeps one location open with certainty. Plan B has a one-in-three chance of saving all three
locations but a two-in-three chance of saving no locations. The second consultant also offers two plans. Plan C
will result in losing two locations with certainty. Plan D has a two-in-three chance of losing all locations but a one-
in-three chance of losing no locations. If the franchisee chooses Plan A, she should also choose Plan:
a. No plan results in the same outcome as Plan A.
b. B.
c. C.
d. D.
ANSWER: c
2. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to four of his least profitable
locations. He meets with two consultants to discuss potential plans. The first consultant offers two plans. Plan A
will result in losing two locations with certainty. Plan B has a three-in-four chance of losing all locations but a one-
in-four chance of losing no locations. The second consultant also offers two plans. Plan C keeps two locations
open with certainty. Plan D has a one-in-four chance of saving all four locations but a three-in-four chance of
saving no locations. If the franchisee chooses Plan B, he should also choose Plan:
a. No plan results in the same outcome as Plan B.
b. B.
c. C.
d. D.
ANSWER: d
3. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A will result in losing two locations with certainty. Plan B has a two-in-three chance of losing all
locations but a one-in-three chance of losing no locations. The second consultant also offers two plans. Plan C
keeps one location open with certainty. Plan D has a one-in-three chance of saving all three locations but a two-
in-three chance of saving no locations. If the franchisee applies the cost-benefit principle, which combination of
plans reflects a consistent decision?
a. Plan C and Plan A
b. Plan B and Plan A
c. Plan D and Plan A
d. Plan C and Plan B
ANSWER: a
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Test Bank for Principles of Macroeconomics
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Test Bank
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Principles of Macroeconomics 3rd Edition
By Betsey Stevenson, Justin Wolfers
Table of Contents
PART I Foundations of Economics
Chapter 1 The Four Core Principles of Economics
Chapter 2 Demand and Consumer Choice
Chapter 3 Supply and Producer Choice
Chapter 4 Equilibrium: Where Supply Meets Demand
PART II Analyzing Markets
Chapter 5 Welfare Economics: Evaluating Market Efficiency
and Market Failure
Chapter 6 Comparative Advantage and Gains From Trade
Chapter 7 International Trade
Chapter 8 Inequality, Poverty, and Social Insurance
Part III Macroeconomic Foundations and the Long Run
Chapter 9 Sizing Up the Economy Using GDP
Chapter 10 Economic Growth
Chapter 11 Unemployment
Chapter 12 Inflation and Money
PART IV Micro Foundations of Macroeconomics
Chapter 13 Consumption and Saving
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Principles of Macroeconomics 3rd Edition
By Betsey Stevenson, Justin Wolfers
Chapter 14 Investment
Chapter 15 The Financial Sector: Banks, Bonds, and Stocks
Chapter 16 International Finance and the Exchange Rate
PART V The Business Cycle
Chapter 17 Tracking the Business Cycle
Chapter 18 Linking Interest Rates and Output Using IS-MP
Analysis
Chapter 19 The Phillips Curve and Inflation
Chapter 20 The Fed Model: Putting it All Together
Chapter 21 Aggregate Demand and Aggregate Supply
PART VI Macroeconomic Policy
Chapter 22 Monetary Policy
Chapter 23 Government Spending, Taxes, and Fiscal Policy
Appendix: A Closer Look at Aggregate Expenditure and the
Multiplier
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Test Bank for Principles of Macroeconomics 3rd Edition By Betsey Stevenson, Justin Wolfers
Name: Class: Date:
Chapter 1
1. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A keeps one location open with certainty. Plan B has a one-in-three chance of saving all three
locations but a two-in-three chance of saving no locations. The second consultant also offers two plans. Plan C
will result in losing two locations with certainty. Plan D has a two-in-three chance of losing all locations but a one-
in-three chance of losing no locations. If the franchisee chooses Plan A, she should also choose Plan:
a. No plan results in the same outcome as Plan A.
b. B.
c. C.
d. D.
ANSWER: c
2. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to four of his least profitable
locations. He meets with two consultants to discuss potential plans. The first consultant offers two plans. Plan A
will result in losing two locations with certainty. Plan B has a three-in-four chance of losing all locations but a one-
in-four chance of losing no locations. The second consultant also offers two plans. Plan C keeps two locations
open with certainty. Plan D has a one-in-four chance of saving all four locations but a three-in-four chance of
saving no locations. If the franchisee chooses Plan B, he should also choose Plan:
a. No plan results in the same outcome as Plan B.
b. B.
c. C.
d. D.
ANSWER: d
3. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A will result in losing two locations with certainty. Plan B has a two-in-three chance of losing all
locations but a one-in-three chance of losing no locations. The second consultant also offers two plans. Plan C
keeps one location open with certainty. Plan D has a one-in-three chance of saving all three locations but a two-
in-three chance of saving no locations. If the franchisee applies the cost-benefit principle, which combination of
plans reflects a consistent decision?
a. Plan C and Plan A
b. Plan B and Plan A
c. Plan D and Plan A
d. Plan C and Plan B
ANSWER: a
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